Explorez tous les épisodes du podcast Alpha Trader

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Gabriela Santos, global market strategist at JPMorgan Asset Management.


Among the topics covered:

There are lots of positives going into 2022, says Santos, expecting the pandemic to fade further, inflation to moderate, and growth to remain strong. For now, at least, inflation should prove to be a boon to corporate profits. The only thing holding the JPMorgan Asset Management team from being uber-bullish is the starting point for stocks - it’s been a big two years for equities, and valuations are perky as we end 2021.

JPMorgan’s just-completed Long-Term Capital Market Assumptions report looks out to the next 10-15 years, and Santos notes it’s somewhat easier to predict returns over this longer period than over the next 12 months. That report sees U.S. equities returning an average of just over 4%. The better opportunities, says Santos, can be found in more reasonably valued Europe and developing markets.

This is Alpha Trader’s final podcast. It’s been a great run over the past two+ years, and we’d like to thank all of our fantastic guests and our sponsor CME Group.

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This week’s Alpha Trader features host Stephen Alpher speaking with Scott Bauer, CEO of Prosper Trading Academy (co-host Aaron Task is off this week).

Among the topics discussed:

The recent market stumbles probably have a lot more to do with the Omicron variant, rather than the Fed speeding up its pace of policy tightening, suggests Bauer. For now, Omicron is more about cases, rather than serious illness, but it’s too early to have a handle on how this plays out.

Of that Fed tightening, Bauer isn’t too worked up about the central bank’s “plan” to maybe hike three times in 2022. That would still leave short rates near historic lows, and even a move in long rates to the 2.5% area shouldn’t pose much issue for the economy.

While leaning bullish on stocks right now, Bauer isn’t trying to hit any home runs thanks to the Omicron wild card. He’s been selling volatility on spikes, noting that seemingly every market downdraft of late has been quickly faded (and he’s using the subsequent rallies to buy back that vol).

Looking into 2022, he’s fan of the recently hit big banks, expecting players like Goldman Sachs and JPMorgan to do well alongside the continuing strong economy.

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This episode of Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Brue Liu, CEO at Esoterica Capital, and portfolio manager of the Esoterica Thematic ETF Trust (WUGI).

Among the topics discussed:

5G technology is much more than just an upgrade from 4G, says Liu. If one thinks of 4G as enabling the mobile internet, 5G will allow the digitization of every aspect of our lives - from streaming to smart homes to smart factories to remote healthcare to self-driving cars. Another difference - if 4G was mostly a U.S. phenomenon, 5G is global.

The evolution to 5G technology will first be felt in semiconductors as all devices will require upgrades. Among Esoterica’s top ten holdings are Nvidia (NVDA), Xilinx (XLNX), Marvell (MRVL), Qualcomm (QCOM), Advanced Micro Devices (AMD), and Taiwan Semiconductor (TSM).

Speaking of the recent crackdown by Beijing on China’s large tech companies, Liu says these regulatory developments have been a long time coming. The country’s leadership has long felt the tech giants have been extraordinary beneficiaries of hyper-growth, and now it’s time to share some of the wealth, says Liu. As recently seen with Meituan (MPNGF), the companies will reach a settlement with the government, agree to changes, pay a fine, and move along.

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This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with veteran Wall Street technician and current Realmoney.com columnist Helene Meisler.
Was that it? The great correction of early 2020 was a relatively brief and shallow one. Just days after a bit of fear entered the markets, the major U.S. averages are marking (or close to) new all-time highs. Meisler expects another modest move down is necessary to wring out a few more of the excesses that were evident a few weeks ago.
The moonshot in Tesla (TSLA) is the very definition of parabolic, says Meisler, and while the move down has been panicky (as one would expect), she's looking at the $650 area for support. That discussion leads to a bullish idea: The anti-Tesla, i.e. energy.
The sector has underperformed for some time, and January's plunge might have been the washout necessary for a bottom to form, says Meisler. The ESG fad (or not a fad), the rise of Tesla, fracking ... At some point the bad news has been priced in. Meisler is keeping her eye on the Energy SPDR (XLE), noting it's managing to hold above support even as oil is making new lows.
Another underperformer has been the banking sector, and Meisler thinks the chart of the KBE Bank Index (KBE) vs. the S&P 500 (SPY) has already put in a bottom.
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This week's Alpha Trader podcast features Wolfe Research Managing Director John Roque, and Jerome Levy Forecasting Center Director of Research Sri Thiruvadanthai.
Roque's technical indicators prior to last week were clearly pointing to a coming correction, and the coronavirus scare was the excuse needed for markets to begin heading down. Folks are already wondering when to buy the dip, but Roque notes the move lower has been very modest both in terms of points and time. With the S&P 500 (SPY) at around 3,250, Roque's got his eye on 3,100 before he might consider turning bullish again.
The action has been particularly ugly in energy (XLE), with one midcap index Roque follows down a full 23% just in January! On this, the charts are pretty clear to Roque - crude oil (USO) looks set to test its 2016 lows in the low-$30s (vs. the current $51). Gold (GLD), on the other hand, is looking very good on the charts, plus - as is typical - sentiment is lame, and the yellow metal remains "underowned" by most. Roque's looking for a new all-time high this cycle, surpassing $1,921 seen in 2011.
Before we get too bearish on equities, Roque reminds that the Federal Reserve bank is always at the ready to support markets with whatever tools it has.
The U.S. budget deficit is now forecast to top $1T this year, or 4.3% of GDP, and stay at or above those levels for the foreseeable future. Sri Thiruvadanthai isn't a full-on believer in Modern Monetary Theory (which is wholly unconcerned with deficits for a government that prints its own money), but those folks do have some valid points, he says - most importantly, that default can't happen unless a political decision is made to do so.
The flip side of the choice not to default, however, is inflation, and that is certainly a valid concern at times, says Thiruvadanthai. This, however, isn't one of those times. The Fed has missed its inflation target (from the downside) for eight years running, he says, and the streak looks to be going to nine in 2020.
More concerning to Thiruvadanthai is that the deficits are so high given 50-year lows in unemployment. It suggests to him that "beneath the hood" the economy isn't as strong as it seems, and is being propped up by the deficit.
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The one-way stock market has gotten its excuse to reverse course a bit with the coronavirus panic. Even with the skittishness, hosts Aaron Task and Stephen Alpher note it's only been the most modest of pullbacks so far. Even if inclined to buy-the-dip (and the hosts lean that way), there's no need to rush to do so.
The question at hand: Is the market in a 1999 topping-out scenario or a mid-90s correction within a major bull market? Paul Tudor Jones, Seth Klarman, and even corporate gadfly turned stock-picker Ralph Nader are in the 1999 camp. Bridgewater honchos Ray Dalio and Bob Prince, and Appaloosa's David Tepper, on the other hand, remain bullish. Dalio - holding court at Davos last week - declared "cash is trash."
Dalio's partner Prince even suggested the boom/bust cycle is kaput. The globe's major central banks are in a box, he says, not wanting to hike because of secular deflationary forces, and not wanting to ease in order to have some bullets in the chamber should a downturn hit.
The focus at the moment is on the coronavirus, but this week will see some major Q4 earnings reports, Tesla (TSLA), Apple (AAPL), and Caterpillar (CAT) among them. Tesla's surge is arguably the largest single story in stocks over the past months, and Task wonders exactly how big a number will the company have to report to keep the momentum going. Instead of guessing, the hosts decide to see how the market reacts to either the good or bad news. They point to the recent case of Five Below (FIVE), which tumbled about 20% in response to disappointing holiday sales. Several sessions later, most of that drop had been recouped. A bull on the name might be inclined to stay so.
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Hedge fund manager and editor of Trading With Cody, Cody Willard joins Alpha Trader hosts Aaron Task and Stephen Alpher for this week's podcast.
The episode begins with a discussion of Tesla (TSLA), and Willard - who was a longtime bear on the company (but never short) - began buying close to last year's lows alongside the introduction of the Model 3. Making him even more bullish was the unveiling of the cybertruck. Willard believes every car on the planet over the next five-to-ten years is going to be using some version of the cybertruck's exoskeleton.
It's hard to find hated names in today's one-way stock market, so Willard - strongly bullish long-term - has been doing some trimming around a few long-held positions. "Feet to fire" though, Willard's favorite five stocks are Disney (DIS), Virgin Galactic (SPCE), Spotify (SPOT), Qualcomm (QCOM), and Cisco (CSCO), and Willard spends some time explaining why he's a fan of the companies. Task notes that Cisco kind of deserves the hated name moniker - after all it's down nearly 20% from since mid-summer 2019.
It's the truly revolutionary ideas and industries where we can find future 100- or even 1,000-baggers, says Willard, and space exploration has the potential to be the largest such revolution ever. People are spending too much time worrying about what demand might be for Virgin Galactic's $250K space flights, and not nearly enough time appreciating the technologies that will arise from such activity. Publicly-traded pure plays for space are tough to find beyond SPCE, but Willard is also an owner Aerojet Rocketdyne Holdings (AJRD) and Boeing (BA) on the space idea. He's also an investor in privately-help SpaceX (SPACE).
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Canaccord Genuity Chief Market Strategist Tony Dwyer joins Alpha Trader hosts Aaron Task and Stephen Alpher to kick off the podcast's 2020 season.
Dwyer was among the more bullish strategists last year - and he remains constructive on stocks - but the market's big rise leaves the S&P 500 (SPY) only about 5% below his 2020 target. At the root of Dwyer's bullishness last year was the Fed's about-face, with a switch to rate cuts throughout 2019 vs. the previous years' rate hike cycle.
Currently, a number of technical and sentiment factors are pointing to over-exuberance, says Dwyer, and he's expecting a modest pullback in stocks (timing to be decided upon). The bull market remains intact though, and Dwyer would be a buyer on the dip, particularly in economically sensitive sectors like financials (XLF), industrials (XLI), and information technology (XLK).
Dwyer believes there's been a generational shift in thinking at the Fed, with the central bankers now way more worried about the U.S. becoming the next Japan or Europe, rather than inflation getting to perky. It could be a "very, very long time" before the Fed embarks on another series of rate hikes.
Dwyer also weighs in on the Fed's massive injections of liquidity into the repo market. Smart folks can argue about whether this is simply necessary plumbing or a stealth QE, and Dwyer is happy to defer to their opinions. Bottom line, says Dwyer: "Who cares?" Call it whatever you wish, but the Fed is telling you it's going to inject tens of billions into the system each month. Invest accordingly.
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We're sharing an episode from our Value Investor's Edge Live podcast, hosted on our The Investing Edge channel, in place of our normal Alpha Trader show (which will return next week). This episode features our host, J Mintzmyer of Value Investor’s Edge, speaking with Oystein Kallekev, CEO of Flex LNG, about the overall LNG shipping markets, US-China potential, and IMO 2020 impacts. Shipping has been one of the most buzzed about sectors in the market in recent months, and J is one of the leading experts in the field. We hope you enjoy.
Topics Covered:

1:45 minute mark - Start of discussion- Market review: LNG sentiment now terrible?

4:15 - What market differentials exists between modern and older carriers?

8:05 - Precisely what sort of premium can investors expect to see?

9:35 - Any clear impacts or benefits from the US-China 'Phase 1 Deal'?

13:45 - Do steam propulsion LNG carriers have a future?

17:15 - Any major new technologies on the horizon? 2030 carbon reduction? 

22:15 - What about TFDE propulsion? Is there a clear future for these? 

26:00 - Are there any direct impacts coming from IMO 2020 regulations?

30:40 - Are you planning to increase your charter coverage into 2020?

35:35 - What are your capital allocation priorities with extra free cash?

40:05 - Will dividends be closely tied to earnings going forward?


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Alpha Trader concludes its first season with an interview of Michael Gayed, a prolific and well-followed Seeking Alpha contributor, and also the editor of The Lead-Lag Report.
Inflation expectations have bottomed out, argues Gayed, and if reflation is the theme going forward, that means good things for some lagging equity sectors - notably financials (XLF), emerging markets ([[EEM]], [[VWO]]), and commodities like energy (XLE). On the flip side, reflation would mean just the opposite not just for bonds (TLT), but for anything yield sensitive - REITs ([[IYR]],[[VNQ]]) come to mind.
The government needs inflation, says Gayed, to ease the burden of the many trillions in debt it owes. The Federal Reserve needs it as well, he contends, to allow it the room to raise interest rates from still-extreme low levels that it might have the space to ease during the next downturn.
When reading economic tea leaves, sometimes simple is best. The average home contains massive amounts of lumber, says Gayed. Thus lumber prices can be fairly directly connected to expectations for the future of construction and housing. And if you can figure what's going to happen with construction and housing, you've probably got a pretty good idea of what's going to happen with the economy. For the moment, the action in lumber (up big over the last few months) is giving Gayed confidence in his reflation theme.
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Alpha Trader's 11th episode features hosts Aaron Task and Stephen Alpher riffing on the year just passed, and mulling what might be to come in 2020.
Before getting into 2019, Task reminds just how poor 2018 was - with negative returns across pretty much every asset class of note. That red ink came alongside what turned out to be the end of a multi-year Fed tightening cycle. 2019 brought with it Fed easing, and the market responded by moving sharply higher. The "soft landing" having been achieved, the Fed appears happy (for now) to sit on the sidelines in 2020.
The current period reminds Alpher of the mid-90s, when markets had a bit of a rough go it in 93-94 while Alan Greenspan and company were hiking rates, but bounced in 1995 when the Fed eased a bit. The soft landing set the stage for several more years of a bull run. Staying in the mid-90s, Task digs out The Maestro's famous "irrational exuberance" quip, and says there's nothing approximating that right now. He notes a recent poll in which most respondents said the market was down this year (S&P 500 is up 27% at the moment)!
Being bullish for 2020 doesn't mean it's straight up from here, and the hosts remind the late-90s bull move had sizable hiccups in 1996, 1997, and 1998. They remark that there hasn't been a bear in a long run of Alpha Trader guests - from Eddy Elfenbein to J.C. Parets to Ryan Detrick to Jim O'Shaughnessy to Mark Dow to Jon Najarian.
Task also comes back to the Fed's repo operations which is injecting 10s of billions of dollars into the reserve system each month. He wonders if there's a parallel with the Fed's 1999 liquidity injections to stave off Y2K fears. The Y2K worry proved to be unfounded, and the Fed's goosing did little but help create the final blow-off top of the 90s bull market.
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Alpha Trader's 10th episode features longtime options trader Jon Najarian. Well-known for his CNBC appearances, Jon (along with his brother) is currently hanging his shingle at Market Rebellion.

Don't even try to profit by reacting to the headlines, says Najarian. The machines are way ahead of even the most sophisticated traders. Instead, he says, have a plan in place for what names/sectors are going to be able to sustain a move after the headline has worn off.

Getting to specifics, Najarian has put in place his plan for the trade war. He thinks there will be a resolution (and indeed both sides appeared to acknowledge a deal while this episode was being taped), but also that China - its economy under pressure thanks in part to trade - will continue to pump massive amounts of liquidity into the markets. His largest derivative position at this time is thus the iShares Emerging Markets ETF (EEM).

Najarian is a big fan of the CME's newish Micro E-mini futures contracts, which allow individual investors to get in the futures game with far lower capital than even the E-mini futures. And it's not just about opening a position with a very modest margin requirement, but small players can now more easily tweak those positions as the time and price changes.
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Alpha Trader's ninth episode features Behavioral Macro blog author and former hedge fund manager Mark Dow.
Dare we say, "goldilocks?" The economy continues to move forward without inflation moving higher, says Dow. As for asset prices, lingering fear of the financial crisis is keeping animal spirits somewhat in check. Add it up, and Dow sees the Fed happy to stay on hold well into the next year even as short-term rate markets are (kind of) pricing in another rate cut in 2020.
Dow puts to bed the idea that central bank liquidity is driving the economy and the stock market higher. He notes both the economy and stocks surged from 2015 on even as the Fed was pulling liquidity from the markets (until the recent rate cut cycle). Instead, we can thank the big surge in growth to the big post-election fiscal stimulus package, and as that's worn off, the GDP numbers have come down to more sustainable levels.
Dow reminds that folks are more likely to take on risk when they're comfortable in their jobs and their situations. And we can add in a third factor - when they see people around them making money. Those three items - far more than the level of interest rates - drive risk-taking.
How is Dow positioned going into 2020? He's long for the reasons stated above, but also because he believes there's a "shortage" of both high-quality assets like Treasury paper, and stocks. If you think the permabears are upset now because of their failed macro call, says Dow, wait until valuations go even higher as investors look to put money to work in a stock shortage environment.
Bitcoin is the most "pattern-perfect" asset he's ever seen, says Dow, and what the charts are telling him now is that it's dying. Assets in bull markets typically don't make significantly lower highs, says Dow, and that's what Bitcoin has done.
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A special bonus edition of the Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Mike Alfred, founding CEO at BrightScope Digital Assets Data, and a board member at Eaglebrook.

Among the topics discussed:

Yes it’s nice that the current price action in bitcoin (BTC-USD) is bullish, but Alfred urges focus on the long-term. The size of the network will continue to grow, more institutions are buying in (but haven’t yet publicly announced), even more institutions are going to have to buy in, and there’s no end in sight to federal deficits and central bank money printing. Bitcoin is likely going to seven figures within the next decade, so it doesn’t matter too much whether one buys at $60K or $30K, or anywhere in between.

Move over FAANG and make room for CHARM. China’s banning of bitcoin mining has led to an even greater opportunity for North America-based miners. This so-called CHARM group: Core Scientific (XPDI), Hut 8 (HUT), Argo Blockchain (ARBK), Riot Blockchain (RIOT), Marathon Digital (MARA) now has a larger opening to scale up and build market share. Alfred notes the miners are the only players who can create their own bitcoin, they’re hodling onto to all the bitcoin they mine, and their cost of capital is rapidly trending towards zero.

Alfred also owns ethereum (ETH-USD), but says it’s a very modest amount vs. his allocation to bitcoin. He considers ethereum as more of a venture capital play on some possibly interesting utility uses. Bitcoin, on the other hand, is a truly decentralized, organically-growing monetary network that is continually becoming more valuable. If Bitcoin is successful with potentially billions holding and using it, it doesn’t require a whole lot of imagination to see what one of 21M coins might be worth at some point. Could Bitcoin fail? There’s a non-zero chance, says Alfred, but as the network grows, the chance of this happening continues to slide.

Turning to brokerages, Coinbase’s (COIN) stock has had a modestly rough run of it since its IPO, but the action reminds Alfred of Facebook’s initial rough post-IPO trade. As Bitcoin grows, and crypto grows, a well-run Coinbase figures to scale right alongside, even if it faces competition on fees from any number of peers. Look at Schwab ... It’s doing better than ever, even with $0 commissions.

After dithering for years, what is the first Bitcoin ETF that the SEC finally approves? It’s a futures-based ETF offered by ProShares which may make for a nice short-term trading vehicle, but is about the last thing any Sats stacker should be interested in. More interesting to Alfred is the Grayscale Bitcoin Trust (GBTC), which has begun the work to convert to an ETF. It’s trading at a 15%-18% discount that will disappear once the ETF conversion takes place - a pretty decent return should that happen in the next 6-12 months.

The train has left the station, says Alfred, speaking of questions about whether the U.S. could somehow ban or halt Bitcoin. There are too many states that have encouraged and are receiving Bitcoin-based investment for any national ban. There is a minor risk, concedes Alfred, that a cabal of powerful governments - think U.S., EU, China, India - get together to severely restrict Bitcoin. Alfred puts the chances at about 1%, but even a move like this would only curtail the size of the network, not kill the crypto.

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The eight episode of Alpha Trader features longtime energy trader Bob Iaccino of Path Trading Partners.
Asked to handicap this week's OPEC meeting, Iaccino doesn't expect additional production cuts (nor does he see the cooperation for cuts in the future). One reason is OPEC's dwindling influence over the global crude market. He notes the previous cut had little effect, and OPEC likely realizes it would take a drastic reduction to really move prices higher. Another reason is the Saudi Aramco IPO - the company is now answerable to shareholders instead of The Kingdom, and is likely to have greater focus on things like profits and dividends.
On whether the beat-up energy sector (XLE) might be a good investment, Iaccino isn't so sure. Not "big on correlations," Iaccino believes that if you've got an opinion on crude oil, you ought to be trading crude oil futures, not energy names, nor ETFs like [[USO]].
Prior to chatting with Iaccino, Task and Alpher talk about Monday's tariff news - first the president re-imposing tariffs on Brazil and Argentina, and then Commerce Secretary Ross reiterating that December 15 is the deadline for China to make a deal or face higher tariffs. If 2019 has been the year when companies were able to sail past the difficult tariff news, will 2020 be the year when higher costs catch up?
The Fed meets this week, and isn't expected to continue with the rate cut cycle - news that surely won't sit well with the president. The central bank takes heat from everyone, but with the end of rate cuts (for now), it's worth considering whether the Fed has accomplished the so-called "soft landing."
Speaking of the economy, the early overall holiday sales picture is looking strong, with the online juggernaut continuing, but retailers like Walmart (WMT) and Target (TGT) adjusting very well, particularly with their in-store pickup initiatives. Amazon (AMZN) has been the category killer, but if Walmart and Target - with their well-located real estate - are going to become distribution centers, perhaps the onus is now on the House of Bezos to adjust.
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The seventh episode of Alpha Trader features Jim O'Shaughnessy, who helms O'Shaughnessy Asset Management, and is the author of several book on the market, including the seminal What Works on Wall Street.

"Arbitraging human nature is the last sustainable edge," says O'Shaughnessy when asked if "what worked" when that book was published (1997) still works today. In other words, yes, systematic and rules-based strategies still have a place for investors looking for alpha.

Passive investors, suggests O'Shaughnessy have one point of failure - things are cruising along, the market drops 20%, they start reading the headlines, panic, and sell ... often at the bottom. Active investors have an additional point of failure - that they will abandon a possibly successful, but underperforming strategy at just the wrong time.

Turning to the more practical, O'Shaughnessy talks about one favored strategy, and that's buybacks. It's underperformed of late, but the data going a long way back is pretty definitive - companies that are active in returning cash to shareholders do significantly better over time than those who spend the money otherwise. To be more specific, large-cap companies that are cheap, operate with low leverage, and are high-conviction in their buybacks (5% or more of the float) are the ones you want to look for.

Prior to chatting with O'Shaughnessy, Task and Alpher get ready for Black Friday by looking at some recent retailer earnings - in particular strong numbers from Walmart (WMT) and Target (TGT). Results and the 2019 price charts (up and to the right) suggest the consumer is doing just fine and both companies have successfully navigated the China tariffs.

The hosts also consider the rise in animal spirits as evidenced by what's quickly become a sizable wave in M&A activity. It might prove to be a harbinger of a Santa Claus rally as investors place bets on who's next to be taken over.
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The sixth episode of Alpha Trader features not one, but two guests, with hosts Aaron Task and Stephen Alpher speaking to longtime gold trader Scott Bauer and stock market strategist Ryan Detrick.

First up is Detrick, who talks about the record-breaking length of this economic cycle - currently 124 months and counting. While this may suggest the bull run is getting long in the tooth, Detrick notes nominal GDP has grown just 50% over the 10 years, or roughly inline with post-war economic up-cycles. It suggests to him that there's room to run.

Detrick also reminds that the Fed has just completed a series of three 25-basis point rate cuts. The central bank did the same in 1975, 1995, and 1998, and on average, the S&P 500 was up 10% six months later and 20% a year later.

As for sectors, Detrick is excited that the financials (XLF) and industrials (XLI) look to be rotating into market leadership. Another favorite headed into 2020 is technology (XLK). But aren't stocks expensive? At 17.5 next year's earnings, says Detrick, the valuation of the S&P 500 isn't all that fancy when you factor in just 2% inflation.

And the question on everyone's mind: Holiday rally? Detrick checked the stats for years (like this one) where the S&P 500 has been up 20% YTD going into November. In those years, the market was green in November 100% of the time (7 out of 7), and green in December 86% of the time (6 out of 7).

While looking for a bounce in gold in the short term, Scott Bauer isn't as bullish on the longer-term prospect for the yellow metal. Why? Gold this year has benefitted from geopolitical worries and sluggish economic growth. Over coming years, Bauer expects many of these concerns to fade and global economies to synch upward - both should work to pressure gold prices.

As for actionable trades, Bauer is looking at the options market, and taking advantage of the current low volatility and his bullish short-term outlook. Low vol means options are relatively cheap, and he's got his eye on a March call spread at the CME struck nicely above the current price. The potential payoff, says Bauer, is 5-to-1.

Longer-term, Bauer isn't a huge fan of options as the premium can get too expensive. Instead he would recommend the Micro Gold contract on the CME, which has much lower margin requirements, thus allowing individual investors easier entry and the ability to scale into larger positions.
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The fifth episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking to the WSJ's Greg Zuckerman, author of The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution.

Already a highly accomplished mathematician and successful commodities trader, Jim Simons in his mid-40s wanted more, and took his particular set of skills to the far deeper world of stocks. Equities trading then (the mid-80s) was dominated by fundamental analysis, but Simons didn't know the first thing about dissecting a balance sheet or income statement.

Simons (and team) relied instead on harnessing massive amounts of data into purely algorithmic strategies for trading stocks. Money soon began rolling in by the truckload - since 1988, Renaissance Technologies' flagship Medallion Fund has generated average annual returns of 66% and trading profits topping $100B. It's also changed the financial world. Today, so-called quants are the largest players in the markets, accounting for about 30% of stock trading.

Renaissance is famously secretive, but Zuckerman somehow found a few to open up (just a bit), including Jim Simons himself. It makes for a fascinating story. Sorry, no trading strategies are revealed!

Prior to their chat with Zuckerman, Task and Alpher mull last week's big move higher in interest rates. The surge in yields across maturities for now does away with the inverted curve, though it's only modestly sloped upward. The 10-year yield, however, remains relatively low compared to levels seen just a few months ago. Was last week's action the start of a larger trend?

Also up for discussion is today's highly-anticipated launch of Disney Plus (DIS), and what that might mean for the world of streaming, Netflix (NFLX) in particular. At $6.99 per month, Disney's service is a good deal cheaper than Netflix's most popular plan. While large numbers of folks might not ditch Netflix for Disney, the days of Netflix's pricing power may be coming to an end.
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The fourth episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking to Jim Grant, the founder and editor of Grant's Interest Rate Observer.
The business of modern-day central banking, says Grant, is the business of manipulating the most sensitive price in capitalism - the rate of interest. If Jay Powell can't seem to get anything right, it's because the very nature of his job assures he'll be wrong. At least, notes Grant, Powell hasn't taken the U.S. down the path of negative interest rates (yet).
Of the pressure Powell is getting from the man who appointed him to the role, Grant reminds this sort of criticism goes back to the days of Andrew Jackson, but Jackson - with Twitter unavailable - was perhaps a bit more tasteful about it.
Turning to the credit cycle, Grant believes we're at a precarious stage. Exhibit A is Uber, which at the Grant's offices is known as "interest rates on wheels." The company has about $12B in losses over the past few years, and today sits no closer to profitability (or even a path to it). WeWork is a similar story that at least got sniffed out before being sold to the public. Over the course of a few weeks, it went from a $50B valuation to needing a bailout to stay afloat. Efficient Markets Theory anyone?
Grant then brings up a unicorn maybe you haven't heard about, and that's German fintech player N26. Its co-founder over the summer told the FT, "In all honesty, profitability is not one of our core metrics." This, says an incredulous Grant, "is the kind of thing that causes the market gods to hurl down thunderbolts at us mortals."
Moving to long ideas, Grant is a fan of Altria. Yes, it's in the business of selling a product many don't approve of, but the inelasticity of demand for cigarettes over the years has been nothing short of remarkable. Altria continues to generate an enormous amount of cash, allowing for a current dividend yield of 7.5% - positively mountainous in these days of microscopic interest rates.
Prior to chatting with Grant, Task and Alpher discuss the latest Fed rate cut and employment report. The Fed on Wednesday gave off the vibe that it's done with the "mid-cycle adjustment," and the strong jobs number on Friday, for now, is making the central bank look good in that assessment.
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The third episode of Alpha Trader features hosts Aaron Task and Stephen Alpher talking CME Group Chief Economist Blu Putnam, with topics moving from the Fed, to Brexit, and then back to these shores and the U.S. economy.
The Fed is surely cutting rates this week, says Putnam, but the FOMC is quite divided - some are arguing that rate cuts aren't needed, and others are pushing for an even faster pace of monetary ease. He's going to be very interested in how Fed Chair Jay Powell navigates these differences at his post-meeting press conference.
The Fed's new bill-purchase facility isn't necessarily normal open-market operations plumbing, says Putnam, but neither is it a new QE program. There was no doubt some stress in the repo markets earlier this month, but Putnam reminds that volatility in overnight rates was way higher in the 90s, so perhaps today's market participants have just been put to sleep by the past years' calm conditions. As for the QE question, Putnam says there's a big difference between what the Fed is doing today and its program of a few years ago: QE involved the purchase of vast amounts of long-dated paper, while the current actions involve only very short maturities.
Moving across the pond, Putnam says Brexit is going to happen in one form or another, but what we're seeing is a lot of jockeying about who leads the U.K going forward. The Tories are divided and Labour is divided - the question for both is how they can play Brexit and then come out in power next year and beyond.
Ahead of the talk with Putnam, Task and Alpher continue to scratch their heads about how rate cuts are even part of the conversation given a 3.5% unemployment rate. Is President Trump really influencing the Fed, or is Jay Powell's "mid-cycle adjustment" just an attempt at what in The Maestro's days was called the "soft landing?"
Earnings season is well upon us, and Task notes that larger amounts of S&P 500 companies than normal are topping estimates. Is it good news, or just a good job by managements of massaging expectations? And finally that nagging question - when does Amazon (AMZN) stop being a big grower and start paying a dividend?
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The latest episode for Alpha Trader features hosts Aaron Task and Stephen Alpher talking with J.C. Parets of All Star Charts. J.C. is pure technician - caring not a whit about any of the news, but instead purely focused on what the charts are saying. And what is he hearing? Stocks for the last couple of years have essentially been in a consolidation following an historically strong bull market. This sort of pattern typically resolves in a continuation of the previous trend - meaning a fresh bull run lays ahead.

Making Parets even more optimistic is market sentiment. He notes that pessimism today - with equity markets globally more or less at all-time highs - is greater than it was last December, when markets were falling apart. Strong price action alongside terrible market sentiment is a "killer combination," he says.

It's not just stocks. Bitcoin, gold, and the dollar also have price charts, and J.C. has interesting outlooks on all three.

Ahead of the chat with Parets, Task and Alpher mull last week's surprisingly hawkish comments from the usually dovish Chicago Fed President Charles Evans. Markets have priced in another rate cut at the Fed's late-October meeting. Is a surprise in store?
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Eddy Elfenbein runs the must-read Crossing Wall Street blog and is portfolio manager for the AdvisorShares Focused Equity ETF (CWS). Elfenbein is notable for creating a Buy List of 25 stocks to get into at the start of the year, and then sticking with those names for the next 52 weeks. Also notable: Said list has topped the return of the S&P 500 for 13 straight years, and is set to do so again in 2019.
In this initial episode for Alpha Trader, hosts Aaron Task and Stephen Alpher talk markets with Elfenbein. To preview: With the S&P 500 possessing a yield well above nearly the entirety of the Treasury yield curve, Elfenbein has a hard time finding a reason to be bearish.
Checking the 2019 Buy List, Ross Stores (ROST) is among the stronger performers with a 34% gain. Elfenbein describes the company as very well-run, with management that tends to disappoint with guidance, and then thrill with actual results. Eagle Bancorp (EGBN) is having a rough run (down 13%), but Elfenbein remains a bull. Hurting the stock, says Elfenbein, are overblown worries about the bank's tangental connection to a financial scandal.
Among other topics covered is the implosion in WeWork (WE), and what that might mean for the markets. Far from the indication of a bubble, says Elfenbein, the WeWork saga may point to very healthy times. He reminds of a couple of decades ago when companies with no indication of any sort of real business model were coming public at multi-billion dollar valuations. Now that was a bubble.
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Welcome to the trailer episode of Alpha Trader - Seeking Alpha’s latest podcast which dives into the most important market news and provides insights on upcoming market events. In this trailer, hosts Aaron Task and Stephen Alpher introduce themselves by chatting about a couple of the best and worst trades of their career. The first full episode is scheduled for release on October 15.
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Alpha Trader is a weekly investor-focused podcast produced by Seeking Alpha that will dive into the most impactful market news and set the stage for upcoming market events. Hosted by Aaron Task and Stephen Alpher, episodes will be available every Tuesday, and will include discussions with market experts on topics relevant to active traders.
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On the two-year anniversary of the Alpha Trader podcast, hosts Aaron Task and Stephen Alpher welcome back to the show, Bob Iaccino, co-founder of The Stock Think Tank.

Among the topics discussed:

While the renewable energy movement is a worthy one, the world isn’t yet ready to run on sun and wind. The lack of investment in fossil fuels has the globe on the verge of, if not already in an energy crisis. Some believe oil would need to be in the triple digits to put a sizable dent in the economy and corporate profits, but Iaccino believes this is already happening at $80.

Iaccino reminds that turning the spigots back on for U.S. shale production isn’t as easy as flipping a switch. Even if there were the regulatory appetite to do so (a big if), getting production up and running again requires capital, equipment, labor … all of which are tough to come by at the moment.

As far as the short term, Iaccino and team believe the price of oil (CL1:COM) is extended. They’ve covered their longs and are waiting for a pullback to reload.

Turning to stocks, Iaccino is bullish in the medium-term, but expects there will be one more washout in the averages prior to a resumption of the uptrend. He’s a bottom-up stock picker and never owns more than a handful of names. Among his holdings right now: Cognizant Technologies (CTSH), Hormel Foods (HRL), Viacom ([[VIAC]], [[VIACA]]), Ford (F), Salesforce (CRM), and Sprott Physical Gold ETF (PHYS).

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking first with Mark Minervini, author of several best-selling books, Trade Like a Stock Market Wizard and Think and Trade Like a Champion, among them, and then with Dan David, the founder of short-focused activist-research outfit, Wolfpack Research.
Minervini is leading the pack this year in the U.S. Investing Championship in the $1+ money manager category with a whopping 262% gain. Though not a short seller by nature, at least some of Minervini’s gains have come from his decision on September 13 to short the SPDR S&P 500 ETF (SPY). What led Minervini to short the market and to remain short was his observation of the weakening technicals beneath the averages - among them, 80% of S&P 500 stocks down 10% or more, and just 38% of Nasdaq names above their 200-day moving averages.
Minervini made news last week saying that the technicals of the market remind him of the situation prior to the 1987 crash. Those who extrapolate that statement to him predicting a crash, however, are missing the point. What he’s trying to say is that conditions continue to favor a correction in stocks, so he’s staying short. When the technicals improve, he’ll cover and go long.
Dan David is perhaps best known as a featured protagonist in 2018’s, The China Hustle, a film that documented his work in uncovering fraud in China-based U.S. stock listings. At the root of The China Hustle is that it was legal in China to defraud foreign investors. That remains so today, says David, so bottom line: The financial statements of Chinese companies - from giants Alibaba (BABA) and Baidu (BIDU) all the way down to the smallest of small caps - cannot be trusted. And though David doesn’t trade the Chinese megacaps, he assures that the regulatory crackdown on these players is for real. “Thou shall not be bigger than the state,” he reminds.
It’s all about control, says David, who isn’t surprised by China’s moves against Bitcoin. A government that doesn’t allow its currency to float or guarantee basic freedoms can hardly be expected to sit aside while citizens keep their money off the books. And on Taiwan, David is certain that China will take over/invade at some point, and that the U.S. will be powerless to stop it. Whatever one thinks of Chairman Xi, says David, he’s a man who does what he says he’ll do … And he’s said as much.
Turning to active trades, David continues to be profitably short what he considers to be frauds like SGOCO Group (SGOC) and Moxian (MOXC), and a SPAC deal - Skillz (SKLZ) - where he believes the sponsors were too aggressive with their projected numbers.
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Jeff Kilburg, chief investment officer at Sanctuary Wealth.

Among the topics covered:
What’s behind the current market jitters? Is it the debt ceiling debate, concern about tighter central bank policy, soaring energy prices, supply chain worries, China Evergrande? Whatever the reason and whatever the resolutions to the above concerns, all roads appear to lead to easier than otherwise Fed policy, and Kilburg remains bullish.

Two regional Fed presidents resigned earlier this week thanks to trading scandals, and as the podcast was being recorded, Chairman Jay Powell’s odds of serving another term took a dip when Senator Elizabeth Warren declared him a “dangerous man.”. A lot of this stuff is for show, reminds Kilburg, but it’s yet another reason Jay Powell will more or less continue to stand there with a sign saying “buy risk assets.”

The velocity of the move higher in long-term rates has shaken some, notes Kilburg, but the absolute level of the 10-year yield of about 1.5% remains historically low. As long as the 10-year rate remains range-bound below about 2%, it should be good for tech stocks. Kilburg and team have been buying the dip in areas like cybersecurity and semiconductors. Though a fan of the reflation trade, and an owner of names like 3M (MMM), Boeing (BA), and Masco (MAS), Kilburg did take profits on most energy holdings in mid-September.

Links of interest:

Senator Warren: Fed Chair Jay Powell a 'dangerous man'

Debt ceiling and inflation in focus at Yellen's and Powell's Senate testimony


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This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with David Trainer, CEO of independent research firm New Constructs, and the author of Value Investing 2.0, a newsletter available on Seeking Alpha's Marketplace service.
Among the topics covered:
The Evergrande story out of China is naturally worth paying attention to, but it's particularly important during these times of stretched market valuations. The question at hand is whether the Chinese government will step in to ease liquidity concerns. This is likely to happen, but there's no guarantee.

Trainer explains his proprietary concept of Earnings Distortion, a systematic alpha-generating calculation of a company's true (vs. reported) results.

Among Trainer's favorite picks is Disney (DIS), which is weathering the challenge from Netflix (NFLX) very well. Trainer notes Disney generates massive cash flow from multiple channels, while Netflix is burning through billions.

Another favorite is Walmart (WMT) - like Disney, generating billions in cash flow, and also like Disney, weathering the challenge from a sexier competitor (in this case Amazon).

Links of interest:
David Trainer's Value Investing 2.0

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher discussing the latest macro topics. Technical difficulties kept our guest - RSM Chief Economist Joseph Brusuelas - from the recording, but we were able to speak with him offline and relay some of his thoughts.

Among the topics:
“Team transitory” got a win with Tuesday morning’s softer-than-expected inflation report, says Brusuelas, but - with the CPI continuing to run at north of 5% - it’s still to early to declare victory.

Stocks initially rose on the slow inflation number, but finished the day with losses. Investors may have gotten complacent after what seems like months with no downturn lasting for more than a few hours, but September - so far - has been a return to reality, with the S&P down about 3% in the first couple of weeks of the month.

Meanwhile in China, that country’s leadership reminded everyone that they can send a sector down sharply at any point. This week it was the casino sector that drew some comments from Beijing, sending some of those players down double digit percentages.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with George Ball, chairman of Sanders, Morris, Harris.

Among the topics discussed:

Stocks are expensive and the bull market is long in the tooth, but the Fed (or at least Chairman Jay Powell) is showing little interest in tightening policy. While fast growth and perky inflation would seemingly argue for the Fed to move, don’t discount that Powell would like to keep his job - tapering and/or higher rates wouldn’t be the best career move.

What might upset this equation is the Fed having gotten it wrong on “transitory” inflation. Last week’s “soft” employment report was notable for a 0.6% rise in average hourly earnings - double what was expected. While one could argue that the taper is priced into stock prices, Ball says higher and stickier than expected wage-led inflation certainly isn’t.

Nevertheless remaining bullish, Ball prefers “new tech” names that have far greater upside than the FAANG+ players. Among them are MercadoLibre (MELI) and Chegg (CHGG) - both stocks have had astounding gains over the past few years, but the best way to invest, says Ball, is to have the memory span of a goldfish. The market caps of each remain relatively small compared to the market opportunities they have.

Bullish on cryptocurrencies, Ball recommends splitting an investment up three ways - one-third in bitcoin (BTC-USD), one-third in ether (ETH-USD), and one-third in Coinbase (COIN). If worried about the competitive threat that Coinbase may face as other exchanges raise funds in IPOs, Ball wouldn’t have issue buying a basket of these players instead of just Coinbase.

Ball is also a fan of a recently gone-public small-cap biotech, Sera Prognostics (SERA). The company has a test which can determine if a woman is likely to give birth to a baby prematurely. By being able to identify and treat this condition early, the savings - both from a human and cost standpoint - would be enormous.

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This week’s Alpha Trader podcast features host Stephen Alpher talking with Steve Sosnick, chief strategist at Interactive Brokers (co-host Aaron Task is on vacation this week).

Among the topics discussed:
“​​Goldilocks is a 68-year-old man in a suit,” or how Jerome Powell’s Jackson Hole keynote address managed to please both equity and fixed-income investors. Ahead of the talk, a number of Fed speakers made clear they were in favor of beginning the taper sooner, rather than later. Powell pushed back against that hawkishness, while still suggesting that tapering isn’t too far off.

With more gains in August, the S&P 500 (SP500) is now on a seven-month winning streak. Past history suggests markets will be nicely higher in six months, but Sosnick reminds that so much depends on the timing of the streak - this time around it’s occurring at what may be near the beginning of a Fed tightening cycle.

Shorting the VIX at this point in the cycle may be like picking up pennies in front of a steamroller, with upside (of the bet) of a couple of points, but the downside far greater - particularly as we head into what’s typically the seasonally volatile period of September/October.

The potential of blockchain technology (decentralized ledger) may be as great as that of the Internet, but that doesn’t mean the price direction of bitcoin (BTC-USD) has to be a one-way street higher. Similar to Cisco - which had a huge run early in the era, but has underperformed for more than two decades despite its importance for Internet usage - bitcoin’s price could languish even as blockchain technology delivers society-changing products.

Links of interest:
​​Goldilocks is a 68-year-old man in a suit


Blockchain is to the Internet as Bitcoin is to ?

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Ryan Detrick, chief market strategist for LPL Financial.

Among the topics covered:

Speaking ahead of the results of this week’s FOMC meeting and after a couple of very speedy inflation prints, Detrick suggests a speedier taper has already been priced in by the markets. Betting on perhaps a more dovish Fed action tomorrow might be something to consider. Looking out to 2022, while markets have priced in three rate hikes, Detrick and team believe there will only be two, with the first move not coming until the second half.

Speaking of inflation, Detrick doesn’t believe we’re in a rerun of the 1970s. Yes, the numbers are ugly at the moment, but market-based signals like nominal bond yields, inflation-protection spreads, and the price of gold suggest there may be a speedy improvement in the inflation outlook.

Turning to the markets in 2022, Detrick continues to favor stocks over bonds. He notes that when the S&P 500 is up 20% for the year (which we’ll likely be in 2021), it’s been up the following year nine consecutive times. And in seven of those instances, the average was up double-digits. Since 1950, the average return following a 20%+ year is 11.5%.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Brendan Ahern, chief investment officer at KraneShares, whose flagship fund is the $5B AUM KraneShares CSI China Internet ETF (KWEB).

Among the topics covered:

Why the fall of Afghanistan - no doubt a serious issue for the Middle East - doesn’t necessarily translate into China getting more aggressive with Taiwan

There’s plenty being lost in translation with respect to the regulatory news coming out of China, says Ahern. Much of what we’re seeing - while clunkily handled by Beijing - is no different than much of the regulatory issues faced by the likes of Facebook and Amazon on a regular basis in the U.S. or EU.

The result has been a large disconnect between fundamentals (still great) in Chinese Internet players like Alibaba (BABA), Tencent (TCEHY), JD.Com (JD), Meituan (MPNGF), and Pinduoduo (PDD), and the price action (not so great).


Links of interest:
Why Ray Dalio thinks worries about the China regulatory crackdown are overblown

Why George Soros is highly worried about China

KWEB’s top holdings

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher chatting with Scott Bauer, CEO of Prosper Trading Academy.
Among the topics covered:
Barring worsening news on the Delta variant or some other unfortunate event, there’s little standing in the way of the market continuing to move higher, says Bauer. That doesn’t mean investors shouldn’t be buying protection, and - thanks to recent low volatility - that protection is relatively cheap at the moment.

Recent strong economic growth and inflation prints suggest we’re maybe nearing the end of the zero rate regime sometime in the next year, but Bauer believes the market has discounted as much. More important is how to play stronger inflation, and Bauer - who has been long semiconductors (SMH) through their big run of the past few months - believes there’s plenty more upside to come.

Markets don’t always have to make sense, reminds Bauer. U.S. bond yields until recently had been headed sharply lower, but at the same time the dollar was showing plenty of strength. Apparel stocks have been taking off of late, even amid stores about companies extending work-from-home, and chatter about at least some schools continuing with remote learning.

And of the dollar (USDOLLAR), Bauer expects it to continue rising - not because its a “bastion of strength” - but because it’s being measured against other currencies like the euro and yen that have even larger flaws.

Links of interest:
Prosper Trading Academy

Micron CFO discusses continuing supply chain shortages as semi stocks pull back

Apparel stocks are taking off - why the sector looks appealing

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Ryan Detrick, chief market strategist at LPL Financial.
Among the topics covered:
Appearing on Alpha Trader right in the middle of the March 2020 panic, Detrick cooly explained that the market had more than priced in an earnings disaster, making stocks a buy. Fast-forward 17 months, and we’re in the middle of what might be one of the best earnings seasons ever. So yes, things are a bit perky right now, but the major structural bull market remains intact, says Detrick, expecting stocks to continue to outperform bonds over the next 6-12 month timeframe

The bond bears may have thrown in the towel, but Detrick sees yields creeping higher throughout the rest of the year alongside a still-growing economy and rising inflation expectations. He thinks 1.75% on the 10-year Treasury (vs. the current 1.18%) isn’t out of the question

As to whether we’re entering a new 70s-style period of galloping inflation, Detrick isn’t so sure. He notes the continuation of many of the same factors that have held inflation in check - technology and the Amazonization of the economy, to name two - for the last decade. That doesn’t mean we won’t continue with some strong inflation prints for the next year or two as the economy continues to emerge from the 2020 recession

Turning to favored areas, Detrick and team continue to modestly favor value vs. growth for the rest of 2021. And that leads to favoring cyclical sectors like financials, industrials, and materials.

Links of interest:
This earnings season is an upside record-breaker

Detrick’s March 10, 2020 appearance on Alpha Trader

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Mark Dow, author of the Behavioral Macro Blog, and a former hedge fund manager.

Among the topics covered:
The China regulatory crackdown is clearly not good news for that country’s tech names, and suggests not great relations between Beijing and D.C., but it need not be a headwind for additional records for the S&P 500

While it’s entirely possible that we’ve already passed the peak growth phase of the current economic recovery, that doesn’t mean solid growth won’t continue for several more quarters or years. Along those same lines, Dow believes that inflation may have peaked as well

A lot has been made about what the recent big drop in long-term Treasury yields might be saying, but Dow believes that price signals in the government bond market aren’t what they used to be. Find out why

Dow’s explanation of the monetary policy transmission pipes. The Cliff’s Notes: It’s a closed system, i.e. the Fed’s “printing” of money ends doesn’t go into the economy, it stays in the Federal Reserve deposits of the banks. It’s for this reason that those predicting the next great inflation keep getting it wrong.

Links of interest:

Behavioral Macro blog

The China regulatory crackdown in an fund - The KraneShares CSI China Internet ETF


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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Blu Putnam, chief economist at CME Group.
Among the topics covered:
Making sense of the continued decline in long-term yields even as inflation surges

Why we’ve probably already seen the peak in economic growth for this recovery cycle

A defense of the Fed’s “transitory” inflation argument

Alternative data sources like international travel numbers, sports attendance, and restaurant seating might give the first clue about how the Delta variant affects the growth outlook

Why modern banking means the link between the money supply and inflation has been irrevocably broken, and ...

Why 70s-style wage-push inflation isn’t an issue in today’s digital economy

Links of interest:
What does the bond market know as 10-year yield tumbles
10-year Treasury yield drops below 1.2% for first time since February

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This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Fari Hamzei, the founder of Hamzei Analytics and Timer Digest's Top Timer for the past three, five, eight, and ten year periods.
Among the topics covered:

Any number of indicators clearly point to stocks in need of at least a modest correction (5%-7%), but the market continues to grind to new records

Hamzei is on the lookout for a catalyst that might give the all-clear signal for an aggressive short. What that might be is uncertain, but Hamzei suggests the Robinhood IPO might make a blowoff top event in the same way the Coinbase IPO marked the peak for bitcoin earlier this year.

Hamzei is playing his current bearishness by being long put spreads on the Nasdaq 100 (QQQ) and the SPDR S&P 500 (SPY), but things are uncomfortable. The question he's wrestling with now: Roll the positions forward, or cut bait? Another consideration is the start of earnings season - Hamzei is mulling whether it makes sense to get a little bit long to take advantage of what should be strong results

Task and Alpher mull Tuesday's inflation report which showed a 13-year high for the headline rate (5.4%) and a 30-year high for the core rate (4.5%). The bond market snoozed right through those big prints, with the 10-year Treasury yield remaining near a multi-month low at 1.36%. What gives? Is the bond market discounting an as of yet unforeseen economic slowdown? Or has all price discovery been lost thanks to the Fed's massive monthly asset purchases? Whatever it might be, Alpher reminds that a fast inflation print isn't necessarily a good reason to sell bonds. After all, the previous CPI high came in 2008 amid one of the great deflationary episodes in market history.

Links:

Hamzei Analytics

Bonds snooze, bitcoin slides, gold perky as inflation rises to 30-year high


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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Nancy Davis, founder and CIO of Quadratic Capital, and manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL).
Among the topics discussed:
No one can be certain of the inflation outlook - be it the Fed’s “transitory,” or somewhat more persistent than that, or of the runaway type

No matter the outlook, we’re all naturally “short” inflation, so should look to have at least some exposure to higher inflation in our portfolios

The IVOL holds about 85% of assets in inflation-protected Treasurys (TIP), and uses the remainder of assets to go long fixed-income volatility

The benchmark Bloomberg Barclays Aggregate Bond Index (ETF version: [[AGG]]) has no inflation protection among its holdings, and - through its high allocation to MBS - is actually short volatility

The recent rally in Treasurys - which has sent the 10-year yield down to 1.36% - doesn’t make a whole lot of sense given strong economic growth and perky inflation. Is a slowdown on the way, or are investors too aggressive in pricing in rate hikes, or have central bank asset purchases erased the idea of price discovery?

Why gold is overrated as an inflation hedge

Links:
The Quadratic Interest Rate Volatility and Inflation Hedge ETF

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Scott Redler, chief strategist at T3 Live and the T3 Trading Group.
Among the topics discussed:
Don’t get hurt with opinions, says Redler, a pure technical trader. He keeps his eye on the 8- and 21-day moving averages for the S&P 500, Nasdaq 100, and Russell 2000. When above, says Redler, that means “risk on,” and he’ll look to buy individual names with the best technical setups.

Redler is unconcerned that equity markets continue to make new record highs even as falling long-term yields might suggest some trouble ahead. For now, says Redler, stocks are unconcerned about what the bond market might be saying. Again - don’t get hurt with opinions. At some point it might be an issue, but for now the direction for stocks remains higher.

Among recent small- and mid-cap buys thanks to good technical setups are Skillz (SKLZ), Sunpower (SPWR), Churchill Capital (CCIV), and NIO (NIO).

Crypto has charts as well, and Redler sees a battle being waged on bitcoin (BTC-USD) around the $30K level. It’s fallen below that level a couple of times in the past few weeks, but has quickly bounced. That tells him there’s a pretty good chance last week’s $28.8K is the lowest we’ll see for a few months.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking first with Jim Iuorio, director at TJM Institutional Services, and then with Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.

Among the topics covered:


Why Iuorio believes China’s crackdown on Bitcoin (and Beijing seems to mean it this time) makes the long-term thesis even more compelling, even as the bulls are likely to experience more pain in the near-term.

Last week’s modest hawkish surprise from the Fed was probably not that big of a deal, says Iuorio, but it caught a lot of inflation trade longs too far out over their skis. Hence, we saw big reversals in bond prices, gold, commodities, and the dollar, not to mention the banks.

It wouldn’t surprise Iuorio if Fed Chair Jay Powell - speaking later this week - pushes back against any ideas that he’ considering tighter policy anytime soon.

“Investment success in this expansion is likely to be the result of ignoring recent history,” says Brent Schutte, as a combination of fiscal and monetary policies will shift concern about deflation and sluggish economic growth to inflation and speedier growth.

Schutte also believes that markets are making a bit too much about the FOMC meeting last week. The “dots” may have been shuffled around a bit, but there’s been no hint of any imminent policy change.

Whether one agrees with it or not, markets are de facto part of the Fed’s mandate these days, says Schutte. Ultimately, that’s going to have the central bank well behind the curve on inflation, and that’s going to be good for stocks - particularly the cyclicals, value names, and small caps.


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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Sylvia Jablonski, co-founder and CIO of Defiance ETFs.
Among the topics covered:
The conundrum of falling long-term Treasury yields as inflation moves higher
Jablonski’s expectation that the inflation scare will be transitory, and won’t derail the continuation of the reopening trade
Why the recent underperformance of FAANG names like Apple and Amazon provides a great buying opportunity for long-term oriented investors
Her take on Paul Tudor Jones calling the current state of fiscal and monetary policy “batsh*t crazy,” and where she thinks the might be the best way to play the inflation trade
Why Jablonski thinks cryptocurrency might be a generational opportunity, and she holds Bitcoin (BTC-USD) and Ethereum (ETH-USD) in her personal portfolio.
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with J.C. Parets, founder and chief strategist at All Star Charts.

Among the topics covered:

The technician’s take on last week’s swoon and this week’s major bounce in the stock market. The Cliff’s Notes: The S&P 500 (SP500) held above its September low of 4,500, setting the stage for the rally.

Swooning along with stocks, were cryptocurrencies, including a flash crash as we slept on Saturday morning, which took bitcoin (BTC-USD) down by about 20% in minutes. Not necessarily bearish on bitcoin, Parets prefers those cryptos showing relative strength, among them Terra (LUNA-USD), TerraCoin (TRC-USD), Decentraland (MANA-USD), Axie Infinity (AXS-USD), and Sandbox (SAND). He’s got a sizable portion of his trading assets invested in these, and at the moment is earning some whopping yields.

While crude oil fell from about $85 per barrel to $65 during November, the Energy Select SPDR (XLE) and the Oil & Gas Exploration SPDR (XOP) barely budged off their highs. That’s the sort of bullish divergence Parets loves to see. He prefers the producers (and thus XOP) to the services names, thanks to the producers’ relative strength. Two favorites are Chevron (CVX) - at a 52-week high despite the price retreat - and Cheniere Energy (LNG), which might have the strongest technicals of any oil & gas name.

Among other nuggets: Buying in hopes of mean reversion is like working in a coal mine, while buying strength is like going to a warm beach. Go to the beach.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jim Bianco, president of Bianco Research.
It doesn’t take too long of a memory to remember the days when then-Fed Chair Janet Yellen was none too pleased about President Trump sticking his nose into monetary policy. Now that Yellen has moved to the Executive Branch (as Treasury Secretary), why does she think it’s okay to continue to opine on Jay Powell’s business, asks Bianco.
Of her latest comments about higher interest rates being a good thing for the economy, Bianco isn’t so sure. It depends why they’re rising, says Bianco. If it’s due to wholesome growth, that’s not so bad for the economy or stocks. But if due to bondholders demanding higher rates to compensate for higher inflation, the stock market might not react so nicely.
Politics aside, current Street thinking says the Fed is going to use the Jackson Hole confab in late August to lay the groundwork for the taper to begin, with rate hikes to maybe start in the second half of 2022. Bianco questions that consensus. He’s keeping his eye on the 10-year Treasury yield. If an inflation scare forces long rates higher, it could force the Fed’s hand a lot sooner than that.
Of his recent great interest in the promise of cryptocurrencies, Bianco takes us back to the days of Web 1.0 - peer-to-peer, decentralized. That was quickly supplanted by Web 2.0 - the rise of the great centralized platforms like Amazon, Facebook, Netflix, and Google. Web 3.0, says Bianco, will be a return to decentralization thanks to the power of blockchain technology.
It’s a fascinating discussion, with plenty more, including why Web 3.0 may not be kind to the above-mentioned (and other) mega-cap tech names, and why central bank digital currencies could be a major threat to the legacy commercial banking system.
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Bob Iaccino, co-portfolio manager of The Stock Think Tank, and host of The Market Think Tank.
Talking as oil (CL1:COM) jumps 3% to a new cycle high, a bullish Bob Iaccino says demand for crude is rising a lot faster than OPEC is willing to supply it. With the American shale boom not coming back anytime soon, the cartel knows it’s the marginal supplier, and is only going to drip out as much oil as is necessary.
Speaking of those American supplies, Iaccino takes note of restrictive drilling/exploration policies of the Biden administration, as well as the growing power of the ESG movement, which last week took down a couple of board seats at Exxon Mobil (XOM).
Of possible crude-related investments, Iaccino reminds that when he’s bullish on oil, he buys oil. The correlation between the energy sector and crude isn’t always one-to-one, and it would be highly frustrating to be right on oil and watch energy equites not do a whole lot.
Zooming out to the larger inflation picture, Iaccino suspects the Fed will be proven wrong over its insistence that currently perky price levels are transitory. While commodities may go up and down in price, the cost of labor is far stickier. The wage hikes we’ve been seeing - Bank of America lifting its minimum wage to $25 per hour is but one example - aren’t going to be given back. Ultimately, they’re going to feed through into the price level.
There’s plenty more, including Iaccino’s view on whether the dollar is going to continue its downtrend, and what stocks he’s buying (non-energy-related, of course).
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Henry Blodget, co-founder and CEO of Insider, Inc., and a former top-ranked Internet stock analyst.
Blodget was pitched an investment in Bitcoin (BTC-USD) all the way back in 2011 (price then was about $80 per coin). His conclusion then was that Bitcoin was the perfect asset for a speculative bubble - finite supply, complicated, hard to understand, and with price determined not by any normal valuation metric, but instead completely by supply and demand. Thus, you’ve got downside of “only” 100%, and an upside not limited to any valuation benchmark - $100K per coin, $1M per coin, $10M per coin? Why not?
One thing that’s changed since 2011 … Back then, Bitcoin’s backers talked about it as a new type of money or currency. No one really makes that argument anymore. Instead bulls talk about a store-of-value, or a better gold. So don’t expect Bitcoin to disappear, says Blodget. Like gold, it will have its believers for a very long time. But also like gold for very long periods, an investment in Bitcoin may prove to be a dud.
Blodget came to some level of notoriety during the dot-com bubble, and he’s seeing some similarities now. In particular, the rolling speculative bubbles of the past year are looking very familiar to him. Checking valuations, he suspects equity returns will be pretty lame over the next decade. However, he would advise against trying to time the peak. Harking back to the mid-late 1990s, there were any number of what appeared to be bell-ringing tops, but the bull market kept getting bigger.
There’s plenty more, including Blodget’s view of the outlook on Amazon (AMZN) today, and his thoughts on last week’s mammoth deal for AT&T to sell certain WarnerMedia assets to Discovery.
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with David Lebovtiz, global market strategist at JPMorgan Asset Management.
With the market coming off its worst week in three months, the inflation question is atop many investors’ minds. Lebovitz is willing to agree at least in part with the Fed that the current inflation scare is transitory - a supply/demand “mismatch” as the economy rapidly emerges from the pandemic - but he believes the wage pressures we’re seeing now may prove stickier than the central bank anticipates.
Bottom line: While the Fed’s forecasts are probably too dovish, the market’s are far too hawkish in an expectation of a rate hike in 2022. The Fed, says, Lebovitz remains laser-focused on jobs, and as long the unemployment rate remains elevated, expect them to stick with the “not even thinking about thinking about raising rates message” language for quite a while longer.
What that means for the markets is anyone’s guess, of course, but Lebovitz reminds that each year brings an average 14% correction at some point, so it wouldn’t be unreasonable to expect the current downturn to run into the double-digits. Still, with earnings growth expected to be about 50% this year and the Fed unlikely to all of a sudden turn hawkish, it’s hard not to see the markets regaining their footing later in 2021.
There’s plenty more, including what sectors are set to benefit most from the current environment, and why Lebovitz is quite a bit more constructive on Bitcoin than some of his JPMorgan colleagues.
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with David Bahnsen, founder, managing partner, and chief investment officer at The Bahnsen Group.
Speaking shortly after the cyberattack on the Colonial Pipeline, Bahnsen says the news speaks to the need for a robust, voluminous, highly effective, and technologized pipeline system to transport oil and gas in the U.S. He notes that the publicly traded pipeline owners are catching a bid on the Monday morning following the weekend attack - and this follows on the best quarters in years for those operators.
Bahnsen says that those interested in clean energy should also be pipeline fans, reminding that most of the product that flows through pipelines is liquified natural gas. To the extent that pipelines allow the use of natural gas instead coal, that lowers carbon emissions.
Getting to investing in pipelines, Bahnsen says many of the weak operators have been weeded out in recent years, leaving a more high-quality field today. His two favorites are Enterprise Product Partners (EPD) and Kinder Morgan (KMI). Both are among the larger pipeline players, offering not just dividend growth, but also excellent dividend coverage, i.e. payouts are easily covered via free cash flow, rather than the balance sheet. For those who prefer ETFs, Bahnsen is a fan of the recently-launched USCF Midstream Energy Income Fund ETF (UMI).
Turning to interest rates, Bahnsen recently warned about the Japanification of America. That means a number of things, but mostly that the government’s policy of loading debt on top of more debt to keep the economy afloat is not a recipe for an overheating economy and inflation, but instead is a recipe for continued sluggish growth, deflationary conditions, and a continuation of the secular bond bull market.
Bahnsen expects the Fed to continue with ZIRP and other extraordinary measures for years to come, but Bahnsen doesn’t anticipate that to be any more effective at breaking the deflationary trap than the BOJ’s efforts of the last three decades.
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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research.
“The risk of a larger pullback is growing even though [sentiment] indicators remain mostly neutral,” says Frederick, who has taken notice of the remarkable similarities between the post-Covid and post-financial crisis bull runs. If form holds, we’re very close to the same point in 2010 at which a 16% correction took place. While Frederick doesn’t expect nearly that large of a downdraft in stocks this time around, today’s markets - with new record highs hit almost every day - are vulnerable to a move lower.
Longer-term, Frederick remains bullish. He reminds of last week’s personal income/savings report showing personal income up 21% thanks to stimulus checks, but spending ahead just 4%. That leaves a lot of money currently sitting idle and waiting to buy any dips.
What might derail the bull market is a rise in inflation forcing the Fed’s hand far quicker than the currently promised 2023. While Frederick acknowledges the current economic boom and price pressures, he’s on board with the Fed’s description of “transitory.” Covid, he says, has caused massive supply disruptions - just look at the large number of ships sitting in the waters outside West Coast ports. This too shall pass, he says, and with it will be the current inflation scare.
There’s plenty more, including a discussion of what current volatility and put/call readings are telling us, crypto, and why the collapse of the a number of mini-bubbles is a healthy thing for the broader market in the long term.
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